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problem: Last day you picked up the Wall Street Journal & saw the following spot currency quotes:

In U.S. $ per U.S. $

Japan (Yen) .010124 98.775

U.K. (Pound) 1.4036 _____

Required:

[A] Fill in the missing number [Show you’re all calculations!).

[B] find out appropriate spot cross rate between the yen (¥ or JPY) & the pound (£ or GBP)?

[C] The Piggy Bank is currently quoting a spot rate of 140 yen per pound. Demonstrate how a British banker could use geographic arbitrage to profit from bank’s quote. Also find arbitrage profit per British Pound?

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